Insecurity in Nigeria’s oil-producing regions is driving a silent crisis at the pump. As sabotage, crude theft, and militant attacks surge across the Niger Delta, oil production continues to fall, triggering tighter supply and rising fuel costs for millions of Nigerians. While global crude prices remain stable, local pump prices are climbing steeply, revealing how domestic insecurity now plays a central role in shaping Nigeria’s downstream oil market.
In April 2025 alone, three pipeline sabotage incidents hit facilities in Bayelsa State. These attacks are part of a broader pattern that has discouraged investment, pushed out major oil companies, and strained the country’s ability to meet fuel demand. As PENGASSAN President Festus Osifo warned, insecurity is now “the chief reason” international oil firms are exiting Nigeria’s onshore fields.
How Insecurity Disrupts Supply and Drives Up Prices
Shell’s Nigerian production has fallen from around 300,000 barrels per day a decade ago to just 131,000 barrels per day by 2022—largely due to sabotage and oil theft. The company, like many others, has shifted investment offshore to safer deepwater fields, abandoning shallower, more vulnerable assets.
Onshore, security costs have soared. Companies now pay out-of-pocket to hire three or four naval patrol boats for each offshore platform. “That’s not the case in countries like Ghana,” Osifo noted, where government security is provided. In Nigeria, oil companies must cover these costs themselves, amounting to hundreds of millions of dollars annually, discouraging further production.
With domestic output constrained and refineries still largely offline or inefficient, Nigeria now relies heavily on imported petrol. Any supply disruption, whether from insecurity or policy failures, directly impacts the pump.
Between early and late June 2025, petrol prices in Lagos and Abuja jumped from under ₦880/litre to ₦915–₦955/litre. Even Dangote Refinery raised its ex-depot price from ₦825 to ₦880, contributing to a chain reaction of price hikes. Notably, this occurred even as Brent crude prices remained steady at $68–$72 per barrel.
According to PENGASSAN, the pricing mismatch is glaring. “When Brent was near $60, we should have been buying petrol at ₦700–₦750,” Osifo said. Instead, prices approached ₦900, revealing that domestic factors, especially insecurity and opacity, are overriding international trends.
Crippled Infrastructure, Weak Regulation, and Economic Fallout
Damage to key infrastructure worsens the crisis. For example, the 2023 pipeline vandalism at the NNPCL Ejigbo Depot has disrupted deliveries and made logistics more difficult for fuel marketers. When transport lines are attacked or crude is stolen, retailers are forced to make expensive spot purchases, costs they pass on to consumers.
Meanwhile, regulators have come under fire for failing to enforce clear pricing mechanisms. Osifo accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of “exploiting Nigerians” by allowing pump prices to rise unchecked, even when supply and market conditions don’t justify them.
This instability carries national consequences. A Senate report found that Nigeria loses around 200,000 barrels per day to theft and sabotage, more than the total production of some OPEC countries. These losses shrink government revenue, deepen the budget deficit, and weaken the naira. As the currency depreciates, the cost of importing petrol rises, further inflating prices.
The government claims it has reduced theft to about 5,000 barrels per day in 2025. Still, even that shortfall affects supply, budgetary projections, and exchange rates, making domestic fuel prices highly sensitive to security disruptions.
What’s the Way Forward?
Labor unions and industry leaders are calling for urgent reform. PENGASSAN has urged the Tinubu administration to prioritize security over tax incentives. Specifically, the union wants the government to fully fund oil infrastructure protection—following the Ghanaian model—so producers can operate without footing their own security bills.
The union also recommends replicating the Nigeria LNG (NLNG) model for refineries. This would involve handing majority control of the Port Harcourt, Warri, and Kaduna refineries to private investors, with the government retaining a minority stake. The approach, which has worked well at NLNG, could reduce political interference and improve operational efficiency.
Alongside security improvements, stakeholders want better pricing transparency and strong enforcement against pipeline vandals. These steps, they argue, are necessary to restore confidence in the sector and reduce fuel costs for ordinary Nigerians.
In short, Nigeria’s fuel price crisis is not just about global oil markets; it’s rooted in domestic insecurity. As long as theft, vandalism, and regulatory failures persist, Nigerians will continue paying inflated prices at the pump, even when global oil is cheap.